Weighing the Options of Refinancing
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It has been said that only in the case your new interest is at least two points under your current rate, should you refinance your mortgage. That could have been accurate a while back, but as refinancing has been costing less over the last few years, it is never the wrong time to explore the options of a new mortgage loan! Refinancing your loan has a variety of advantages that often make it worth the initial expenditure a few times over.
Benefits
When you refinance, you could be able to lower the interest rate and monthly payment , sometimes by a lot. You may also have the ability to "cash out" a portion of your home equity, which you may use to take care of higher interest debt, make home improvements, or take a vacation. With lower rates, you might also get the chance to build up home equity more quickly by moving to a shorter-term mortgage.
Expenses and Fees
As you probably expect, you will have some fees and expenses during your the refinance process. You will have to pay the same kinds of expenses and fees as with your present home loan. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Doing the Math
You might think about paying points to be given a lower interest rate. When you pay (on average) three percent of the loan amount up front, the savings for the term of the new mortgage can be significant. Please consult with a tax professional before acting on hear-say that these points paid can be deducted on your federal income taxes.
An additional cost that borrowers may consider is that a reduced interest rate will reduce the interest amount you will be able to deduct from your taxes. Call us at 5623200510 to help you do the math.
Most people find that the monthly savings outweigh the up-front expenses of a refinance. We can help you explore your options, considering the effect a refinance may have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at 5623200510 to get started.
Want to know more about refinancing? Give us a call at 5623200510.